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South Africa and diversity in-house and with external counsel

A fascinating article in Legal Week, Vol. 7, Oct. 27, 2005 at 82 explained how legislation in South Africa has driven and will drive diversity at both firms and departments. For example, financial services institutions must procure 50 percent of their services from ‘black-owned,’ ‘black-controlled’ and ‘black-influenced’ companies by 2008. The article does not say whether a law department will be held to that requirement, but presumably if the entire company must comply, each part of it will be held at least partially accountable.

A second oddity was the statement that “South African rules prevent general counsel from instructing counsel directly, meaning that communication must take place via an attorney.” I can’t offer more on that strange-sounding constraint. If it means that the top lawyer in a company cannot retain or direct a law firm, but must do so through an intermediary lawyer, I am at a loss for an explanation.

Third, a law requires that there be a minimum proportion of company employees who were “previously disadvantaged,” which term now refers predominantly to black South Africans. Again, I can only suppose that each law department will have to hire and retain lawyers to comply with that minimum requirement.

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